The real estate seller's credit is a loan that the seller grants directly to the buyer, as part of the sale of his property. It can be a transaction between individuals. But this type of credit also comes at the professional level when selling a company or a business. What is the operation, what constraints?
The particular seller credit
When it comes to an apartment or a house, the real estate seller's credit is advantageous for both the seller and the buyer. Indeed, the rate, the amount and the duration of the credit are freely fixed by both parties.
This solution is especially valid when the seller has difficulty selling his property and the buyer is anxious to diminish the role of banks in granting credit. On the one hand, by granting a credit to the buyer, the seller can maintain the fair price of his property. On the other hand, the seller, if he has a sufficient contribution, can ignore the bank credits.
If the real estate seller's credit represents a certain freedom, it is not less framed by a precise legal framework. An authentic deed must be drawn up before a notary, expressly mentioning the duration, the amount of the loan, the interest rate and ancillary costs.
What to remember from the real estate seller
The seller's credit never bears on the total price of the good. It represents at most 50% of the selling price and more generally 30%. The buyer can pay cash part of the value of the property and complete with a seller credit. The cash sum is paid during the drafting of the deed and the seller credit runs from that moment.
It also happens that the seller's credit supplements a personal contribution and a home loan easier to obtain by the buyer because the amount requested from the banks is lower.
The interest rate is freely fixed by both parties, it can, for example, be at 0% rate, in the case of transfer of company, to avoid negotiations down the overall price. Whether it is a professional sale or not, the duration of the real estate seller's credit is short and is spread over a maximum of 3 years.
It is imperative that the buyer subscribe disability / death insurance for the benefit of the seller. While the notary, when drafting the deed, takes a warranty on the property sold or "lender's lien" to protect him from the risk of unpaid bills. But above all, the real estate seller's credit is based on trust between the two parties.